The Business Department's 'business support' plan says employers benefit from
its national insurance policies but many employers and all employees face
higher national insurance bills from April

The Government has claimed that all employers will benefit from changes to the National Insurance Contributions in April, which accountants say is untrue.

The National insurance (NIC) rates rise for all employers and employees by eight and nine per cent respectively in April.

However, the Coalition Government has mitigated the impact of the tax rise, set in motion by the last Labour Government and labelled as a “tax on jobs” by David Cameron before the general election, by raising the threshold at which employers’ start paying.

This change, which costs £3bn a year, has the effect of marginally decreasing the amount of tax paid by employers for staff earning less than £22,000.

The Business Department has held out this action as one of four key measures introduced by the Government to help people start and grow small businesses.

It stated the threshold changes to NICs had the effect of “benefiting employers by over £3bn a year”.

However, it did not acknowledge that NICS will increase by 8pc to 13.8pc for employers and by 9pc for employees from 11pc to 12pc in April.

The effect of these changes mean that all employees pay a higher rate of tax and that employers will staff earning over £22,000 will also pay more.

The group seeing the highest percentage increase in their tax bills are employees paying the higher rate of income tax. They will see the amount of additional NICs paid on income above the upper earnings limit increase by 100pc from 1pc to 2pc.

Richard Mannion, national head of tax at accountants Smith & Williamson, said: “To claim it has stopped the increase for all small businesses is not true. But the good news is that it is not as bad as it would have been under Labour’s proposals. They would have been worse.”

The Business Department’s presentation of the NICs rise as a fall for employers follows public gaffes by the Shadow Chancellor Alan Johnson. On Sunday he told Sky News the current rate of employers’ national insurance was 20pc.

Mr Johnson and Labour colleagues campaigned last week against the Government’s decision to raise VAT by 14pc from 17.5pc to 20pc and instead indicated they would raise NICs.

To match the £13.5bn raised each year by the VAT rise, Labour would need to NICs by three percentage points as it has ruled out any increases in personal taxation.

Mr Mannion said employers could not assume they would not be paying more tax. “It depends where your employees are on the range of earnings,” he said. “Where they are below £22,000 there’s a marginal advantage. If they are above then you will be paying more.”

He added: “The decision to put up NICs by 1pc was made by Labour. The Tories said this was awful and we will stop it. When they got in they did not reverse it but they restricted the impact.”

He likened it to slowing down when going through a red light. “The short hand was stop the jobs tax. The long hand was stop it for some people.”